It appears that that semantic search startup Powerset, which some were reporting was having major problems getting their search act off the ground, is in talks with Microsoft regarding a Microsoft aquisition.

Powerset, led by software pioneer Bernie Pell, claims to be solving one of the critical problems with web search – the inability of many search routines to pull context out of the query. Many believe that if users could find things using “natural language” rather than keyword searching they would consider switching to the best natural language search. Although Google is now working aggressively in this area it is not clear how much progress they have made. In fact it remains unclear how much progress Powerset has made so far, though Microsoft’s interest in them may imply things are moving along and may lead to a rather impressive Powerset payday.

Dan Farber reports